The Federal Open Market Committee of the Federal Reserve Board is set to announce short-term policy at its quarterly meeting tomorrow, but the Post-Industrial Post has learned of the details in advance. The Fed’s reaction to fears of rising inflation has led most pundits to expect a 50 basis-points rate increase in the target funds rate when the FOMC adjourns Wednesday afternoon.
Along with a continued divestiture program of the Fed’s assets, this can only be additional bad news for both investors and the companies that must borrow money at rates determined by these quarterly powwows. As inflation nears 1970’s levels, The Federal Reserve is faced with the dilemma of balancing rising prices with the lure of cheap money to keep the economy humming.
In an unprecedented move seen by experts as an attempt to temper the pain felt by corporations looking to expand, pay dividends or otherwise grow their their businesses, the Fed has apparently thrown a unique bone to the hounds of commerce. For the first time in memory, a quasi-government entity will offer a value-added incentive to borrow at these new, elevated interest rates. Specifically, bonus merchandise in the form of free oil changes.
In addition to oil changes, the FOMC apparently considered alternatives such as sets of dishes, t-shirts, and what one anonymous board member termed “really nice, embossed juice tumblers with the Fed seal on one side and a stylized drawing of (former Fed chairman) Paul Volcker on the other. First class stuff.”
Ahead of the announcement, Fed chairman Jerome Powell hypothetically asked fellow board members “who wouldn’t want a free oil change? My Mercedes-Benz dealer stopped the lifetime service program during COVID. I’d jump on something like this. I’m confident that this sort of thing will offset any negative GNP effects.”
What wasn’t clear was how the program would actually be implemented, and to what extent. For instance, if a giant, multinational corporation wanted to borrow, say, $500 million at the new rate, would they simply receive one free oil change? A hundred? A million? And who would actually receive the oil change? The corporate CEO? The largest shareholder? Or, the winner of some yet-to-be-determined in-house lottery?
Reached at his lower Manhattan offices, Wall Street analyst Shlomo “Mickey Moishe” O’Hara offered that “his people” were anticipating a one full-service oil change per $100,000.00 bonus structure for the Fed’s program. “If they throw in a nice ice-scraper/brush thingy with the Fed logo printed on it, I can see where there’d be little if any pushback on the new rates. At the end of the day, corporate types are just cheap-ass schmucks like everyone else. Who doesn’t like free stuff?””
While these questions are yet to be answered, Jiffy Lube parent Shell PLC (SHEL) saw their shares jump by almost 4% in Tuesday trading, presumably driven by speculators expecting increased traffic at the service bays of the mega-retailer of lubrication services.
The official Fed announcement will come tomorrow sometime after 2:00 pm EDT. Chairman Powell will take reporters questions immediately following.